Asia-US container rates tick lower; shippers frontloading cargoes on tariff pause
LONDON : Rates for shipping containers from Asia to the US ticked lower this week, although they could see upward pressure from shippers pulling forward volumes ahead of the 30-day tariff freeze, while rates for liquid chemical tankers held steady.
Global average rates fell by 3%, according to supply chain advisors Drewry and as shown in the following chart.
Global average rates are down by almost 18% from 1 September, and down by almost 45% from the high of the year in mid-July.
Rates from Shanghai to both US coasts fell by 1%, as shown in the following chart.
Drewry expects spot rates to decrease slightly in the coming week due to the increase in capacity as container ship order books are at record highs.
Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said his company is already seeing some upward pressure on prices although some could be because of shippers frontloading volumes to beat the 30-day pause before tariffs are enacted.
‘We could expect frontloading ahead of tariffs – which has been a major factor keeping US ocean import volumes and transpacific container rates elevated since November – to intensify until the new tariffs are introduced or called off,” Levine said.
Levine said it is hard to determine the impact from volumes being pulled forward since this has likely been happening for several months, and with the market in the lull surrounding the Lunar New Year (LNY) holiday.
“But we could expect demand and rates to increase post-LNY,” Levine said.
Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets.
They also transport liquid chemicals in isotanks.
LIQUID TANKER RATES STEADY
US chemical tanker freight rates as assessed by ICIS were unchanged this week with contract of affreightment (COA) nominations steady for most trade lanes.
For the cargoes in the South American trade lane, COAs remain strong leaving very little spot availability. A large parcel of ethanol fixed USG to San Luis, and several others were quoted for second half of February.
Similarly, for the USG to ARA trade lane, it was another off week with only a few reported fixtures.
However, there were some unusual cargoes fixed for products like caustic soda and ethanol.
Some styrene was reported fixed from Lake Charles to ARA. Overall, rates seem to be maintaining current levels particularly for the 3,000- and 5,000-tonne parcels.
There was no difference along the USG to Asia routes, as it was another quiet week on this trade lane.
Spot rates remain steady as the H1 February space across the regular carriers is sold out.
Some of the larger players should have space in the second half of February depending on COA nominations. The chemical COAs have been steady through H1 March, but still in the tentative phase.
Several inquiries were seen for methanol, ethanol, vinyl acetate monomer (VAM), styrene and MEG.
On the other hand, bunker prices were unchanged this week but overall remain strong.
PANAMA CANAL UPDATE
Panama’s president said the country will not renew its agreement with China’s Belt and Road Initiative (BRI) after a visit from US Secretary of State Marco Rubio.
President Donald Trump surprised some when he said that the US should reclaim the Panama Canal, and a US congressman has since introduced a bill that would authorize the purchase of the vital waterway.
The actions taken by Panama’s president, Jose Raul Molino, may slow action by the Trump administration to take back control of the canal.
Source: ICIS